Rs 20,19,580 crore DII inflows! 38 months of net stock buying; what's next?

Domestic institutional investors (DIIs), which include mutual funds (MFs), insurance companies and financial institutions, bought Rs 64,758.56 crore worth of domestic equities in September, taking the net inflow trend to the 38th straight month.

DIIs have cumulatively infused money month after month since August 2023, aggregating to Rs 20,19,580 crore, data compiled from corporate database AceEquity suggested. This more than offset the Rs 10,45,605.85 crore in foreign portfolio investor (FPI) outflows seen during the same period.

The highest monthly DII inflows during the period were seen in March 2026 at Rs 1,35,725.22 crore, while October 2024 was the only other month to see DII inflows in excess of Rs 1 lakh crore, at Rs 1,07,254.68 crore. In 2026 alone, DIIs have pumped Rs 6,21,027.97 crore into domestic stocks.

The inflows not only cushioned the market from relentless FPI outflows but also structurally shifted the ownership pattern. The trend, which gained momentum since 2021, continued as DII ownership hit 21 per cent in Nifty 500 companies at the end of the June quarter. This was the ninth consecutive quarter of rise in DII ownership. FII holdings, on the other hand, have fallen of late to a new low of 17 per cent in Q1.

MOFSL, in a strategy note, said the past two years have witnessed record FII outflows and DII inflows. Strong retail participation, supported by steadily rising monthly SIP contributions of about Rs 30,000 crore, provided a cushion against relentless FII selling.

"Surprisingly, the sharp FII outflows of $56 billion over the past 24 months effectively offset the cumulative FII inflows of the previous eight years, leading to near nil cumulative FII investment in the past decade. In contrast, DIIs pumped in a record $177 billion in Indian equities over the past 24 months, 23 per cent higher than the cumulative DII inflows over the preceding eight years," MOFSL said.

Retail investors have been constant buyers through DIIs, MFs and insurance companies over the past few years, while FPIs, PEs and promoters have been large sellers in the past 24 months, Kotak Institutional Equities said in a note this month.

"It would be interesting to see the behavior of retail investors amid muted trailing returns for two consecutive years," it said.